Multiple choice

The term loan of Rs. 50,00,000 was received from IFCI. It was used as under

(i) Rs. 20,00,000 was advanced to supplies for capital work-in-progress (ii) Rs. 30,00,000 was used for financing the working capital

Choose the correct option.

  1. Both (i) and (ii) are capital expenditures.

  2. (i) is capital expenditure and (ii) is revenue expenditure.

  3. Both (i) and (ii) are revenue expenditures.

  4. (i) is deferred revenue expenditure and (ii) is capital expenditure.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Any capital expenditure will be debited under capital account, and all the day to day expenditures will be debited as revenue expenditure.

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